State auditor 'deeply troubled' by findings

LAS CRUCES — State officials ordered the suspension of two Sunland Park personnel on Monday — the result of an 82-page special audit that alleged wide-ranging problems in city finances and fraud in recent years.

The audit highlighted alleged fraudulent spending of taxpayer dollars by indicted former Mayor Pro-Tem Daniel Salinas on prostitutes in Mexico — a case already under investigation by Doña Ana County prosecutors.

Former Mayor Martin Resendiz, known for admitting to signing city contracts while drunk, allegedly violated state procurement rules. His name appeared often in the report.

Suspensions ordered

On Monday, State Finance Department Secretary Tom Clifford ordered that Sunland Park Finance Director Helen Gonzalez be suspended, along with purchasing agent Neryza Rivera, according to a news release. Other former Sunland Park officials, though implicated in Monday's audit report, couldn't be suspended because they've already vacated their posts.

The audit report was released Monday to the city by State Auditor Hector Balderas. The city waived its right to keep the record secret for five days, and it was released to the public.

Problems alleged

A number of problems were connected to spending from a roughly $12 million pool donated by Sunland Park Racetrack & Casino owner Stan Fulton meant to pay for a new international border crossing in Sunland Park, according to the report. In all, 46 cash payments — totaling nearly $1 million — made from the fund were found to each have "an irregularity or deficiency," the audit states.

The purported payments for a November 2011 trip to Mexico, which allegedly involved paying for prostitutes for Salinas and city spokesman Arturo Alba, stemmed from the city's border-crossing fund.

Also, Resendiz and Rivera were alleged to have violated the state procurement code when evaluating a major contract related to the border-crossing dollars.

Other alleged problems identified in the audit report were:

— The former mayor, city council and city management failed to prevent overspending of authorized budget amounts within the city, according to the report.

— The city failed to maintain a yearly inventory of capital assets.

— It didn't maintain proper documentation about transferring all of its utilities assets to Camino Real Regional Utility Authority, a water and wastewater services merger with Doña Ana County.

— City public-meeting minutes didn't comply with the state Open Meetings Act.

— The city allegedly violated the state procurement code in hiring its attorney, Frank Coppler of Santa Fe, because it didn't follow a competitive bidding process. The city paid Coppler $481,378 in legal fees, according to the report.

— The city council forgave about $200,000 in utility bills for residential customers in July 2010, violating the state's anti-donation law, which keeps public dollars from being given to private individuals in most cases.

In many instances, protections that should have been in place to safeguard taxpayer dollars "were ineffective or completely nonexistent," Balderas' report states.

"In other cases, we found that internal controls that did exist were not adhered to or simply over-ridden by the city council, mayor, the finance director or the purchasing agent," which led to violations of state laws and rules, according to the report.

Balderas, in a statement, said he was "deeply troubled by the severity of the audit's findings."

The audit looked at the city's fiscal years of 2010, 2011 and 2012.

In addition, Sunland Park "failed to provide" documents to Balderas' office that related to payroll for the mayor, mayor pro tem, city manager and city councilors, according to the audit.

What's next?

The special audit alleged that Gonzalez was failing to reconcile some bank accounts and failing to properly maintain records for accounts. And Rivera didn't correctly oversee the issuance of contracts, the report alleges.

Gonzalez and Rivera will have a hearing within five days, unless they specifically request a time extension, a DFA news release stated.

The agency will take over their roles in city government.

DFA spokesman Tim Korte emphasized that the state is only taking over the two officials' jobs and is not planning to make "any long-term policy decisions" for the city — a job that still belongs to elected officials.

All Sunland Park services, including police and fire, won't be interrupted, according to the news release. And city employees will report to work as usual.
The special audit is being referred to several law enforcement agencies, including the 3rd Judicial District Attorney's office, state police, the FBI and the U.S. Attorney for New Mexico, according to Balderas' report.

DFA officials said the suspension of additional Sunland Park officials is possible, depending on how ongoing investigations pan out.

Diana Alba Soular can be reached at (575) 541-5443; follow her on Twitter @AlbaSoular

At a glance

Some allegations in Sunland Park special audit report

— The special audit confirmed the fraudulent misappropriation of public funds from the city's Border Crossing Fund by former Mayor Pro-Tem Daniel Salinas. The city spent $42,161 from the restricted Border Crossing Fund as a result of fraudulent invoices submitted by EnviroSystems Management Consultants, Inc. (EMC) and the Diaz Consulting Firm.

— The money then was used to pay for prostitutes for Salinas and the city's former spokesman, Arturo Alba, during a trip to Mexico.

— Additionally, the funds were used to pay the costs of a campaign video for Salinas.

— The city violated the state procurement code by hiring Frank Coppler of Santa Fe as city attorney without following a competitive sealed bid process.

— Former City Manager Aguilera and former Mayor Pro-Tem Salinas were responsible for reducing customers' utility billings and accounts, in violation of state law and the New Mexico Constitution.

— In July 2010, the City Council also forgave approximately $200,000 in utility bills for residential customers in violation of the Anti-Donation Clause and state law.

Source: New Mexico State Auditor Hector Balderas

(Updated 5:30 p.m.)

SUNLAND PARK — Finance and Administration Secretary Tom Clifford is suspending two Sunland Park municipal officials after State Auditor Hector Balderas' report identified multiple violations of New Mexico law that have resulted in mismanagement of public funds.

The report also contains findings related to violations by several former city officials, including the former mayor, two city managers and the city clerk. Because those former officials are no longer in their positions, they are not subject to suspension.

Secretary Clifford has ordered suspensions of Finance Director Helen Gonzalez and Purchasing Agent Neryza Rivera. In accordance with New Mexico statute, DFA will assume the duties of those two officials, according to a news release from the department.

The suspended officials will receive a hearing within five days unless those officials request limited additional time to prepare for the hearing. In addition to these suspensions, DFA will exercise its authority under separate state statute to oversee and supervise disbursement of city funds.

"We have met numerous times with the state auditor and his team and we will continue to work together to methodically and diligently ensure the proper expenditure of taxpayer dollars in Sunland Park," said Gov. Susana Martinez. "The extraordinary level of financial mismanagement in Sunland Park is unacceptable; protecting public funds will be our highest priority."

Under New Mexico law, the finance secretary can issue suspensions if a state auditor's report finds governing officials fraudulently mismanaged funds, violated law related to fiscal management, or willfully violated DFA's financial regulations.

Clifford said the suspensions are aimed at restoring public confidence in Sunland Park's financial operations and protecting New Mexico taxpayer dollars.

"We are not here to make long-term policy decisions for the community," Clifford said. "Our goal is to establish a properly functioning system of checks and balances to prevent future waste, abuse, and mismanagement of public funds."

Clifford assured Sunland Park residents that all core municipal services, including police and fire operations, will continue without disruption. Municipal employees will report to work as normal and continue to be paid.

Additional suspensions of municipal officials are possible, given that the state auditor's work is continuing in Sunland Park.

Updated 4:12 p.m.

LAS CRUCES - Today, State Auditor Hector Balderas announced the findings of his special audit of the City of Sunland Park. The special audit found constitutional violations and numerous statutory and regulatory violations related to the financial affairs and fiscal management of the City. The findings also revealed certain criminal violations related to the fraudulent misappropriation of public money. Based on the findings, Balderas recommended that the Secretary of the Department of Finance and Administration (DFA) suspend officials of City management who are identified by the findings. In addition, Balderas recommended that the Secretary of DFA also closely review the special audit's findings, and conduct further investigation as needed, as those findings may pertain to the suspension of members of the City Council, which is the city's board of finance.

"I'm deeply troubled by the severity of the audit's findings, and I strongly recommend that the Secretary of Finance and Administration take aggressive action to restore the confidence of the City's citizens in its financial operations," Balderas said.

This afternoon, State Auditor Balderas and his auditing staff concluded an exit conference to discuss the audit findings with City officials. The approximately 80 page special audit report contains 27 separate findings relating to the City's disbursements from the Border Crossing Fund, procurement, budget, adjustments to utility accounts, capital assets, cash and investments, travel and per diem, the Fire Protection Fund, and compliance with the Open Meetings Act. Certain findings of the special audit include:

The special audit confirmed the fraudulent misappropriation of public funds from the City's Border Crossing Fund by former Mayor Pro-Tem Daniel Salinas. The audit's findings show the City expended $42,161.35 from the restricted Border Crossing Fund as a result of fraudulent invoices submitted by EnviroSystems Management Consultants, Inc. (EMC) and the Diaz Consulting Firm. The money was used to pay for prostitutes for Salinas and the City's former Public Information Officer, Arturo Alba, during a trip to Mexico. Additionally, the funds were used to pay the costs of a campaign video for Salinas. It was also used to pay a private investigator who filmed a video used to extort Salinas' opponent in the Mayoral election;

The City violated the Procurement Code by hiring Frank Coppler as City Attorney without following a competitive sealed bid process. The City has paid Coppler $481,378 in legal fees;

The City violated competitive sealed bid requirements of the Procurement Code in its award of a $2,400,000 contract to EMC. The money used was from the Border Crossing Fund;

The City violated state law in fiscal year 2010 by exceeding its approved budgeted expenditures for the Joint Utility Fund in the amount of $769,882;

Former City Manager Aguilera and former Mayor Pro-Tem Salinas were responsible for reducing customers' utility billings and accounts in violation of the state law and the New Mexico Constitution. One bill was reduced from $767.00 to $195.80. Auditors found no evidence that the City Manager reduced the bills based on criteria approved by the City Council; and

In July 2010, the City Council also forgave approximately $200,000 in utility bills for residential customers in violation of the Anti-Donation Clause and state law.

Balderas commended the City's Mayor Pro-Tem, Isabel Santos, for helping expedite the public release of the special audit. "I appreciate the Mayor Pro-Tem's commitment to transparency," Balderas said. "Embracing the special audit's recommendations is a positive step forward in improving the City's financial situation."

The State Auditor said he will refer the findings of the special audit to the appropriate oversight and law enforcement agencies, including the Governor, DFA, the Third Judicial District Attorney, the New Mexico State Police, the Tax Fraud Investigations Division of the Taxation and Revenue Department, the Attorney General, the FBI, the U.S. Attorney for the District of New Mexico, and the Legislative Finance Committee.

Additionally, the State Auditor said he will work with the Governor and DFA to secure forensic auditing services as part of the OSA's ongoing efforts to aggressively audit the City's finances and its officials.

Look for full coverage in Tuesday's Las Cruces Sun-News, in print and online.

ODESSA, Texas (AP) — A West Texas man has been charged with impersonating an officer by using sirens and flashing lights to skip to the head of the drive-thru line at a fast-food restaurant. Full Story

Sufjan Stevens, "Carrie & Lowell" (Asthmatic Kitty) Plucked strings and pulsing keyboards dominate the distinctive arrangements on Sufjan Stevens' latest album, and in the absence of a rhythm section, they serve to keep time. Full Story